Economic impacts of the Clean Air Rule

Projected impacts on our communities

Washington is particularly vulnerable to a warming climate. Our communities depend on snow-fed water supplies to provide drinking water,
irrigation for agriculture, and about 65 percent of the state's electrical power.

Annual crop loss in the Yakima Basin: $13 million to $79 million by mid-century because of water shortages.

Water supplies in Seattle: $8 million per year by the 2020s and $16 million per year by the 2040s for costs to conserve water.

Forests: A 50% increase projected in the number of acres burned by wildfire in an average year by the 2020s.

When Ecology proposes or adopts rules that could increase costs for businesses, governments or individuals, we produce two types of economic reports.

The first report includes an evaluation of potential benefits and costs of the rule and examines other requirements Ecology considered during the rulemaking. The second report assesses whether small business have more challenges complying with the rule than larger businesses.

In some cases we perform more extensive economic analyses, which is the case with the Clean Air Rule.

In addition to the two typical economic analysis reports, we evaluated potential
impacts on fuel and electricity prices. On this webpage, we summarize
highlights from all of the economic analyses.

Benefits of the rule

The impacts of climate change are being felt globally and locally. Our state’s ecology, people, industry, agriculture,
and infrastructure are susceptible to economic damage from climate change.

It is estimated that climate change will negatively affect agricultural productivity and human health. It will also cause
property damages from increased flood risk and changes in energy system costs, such as reduced costs for heating and increased
costs for air conditioning.

By implementing the Clean Air Rule we will contribute to slowing these effects of climate change. We estimate that we will
prevent $9.6 billion in negative economic impacts by 2036.

Costs to businesses

Businesses can comply with the rule in a variety of ways. They can reduce emissions directly at their facility and they
can get emission reduction units from another approved source.

How businesses choose to comply will determine the cost. We evaluated the various ways to comply and projected a range of
costs over 20 years.

The projected low cost of compliance for all businesses combined is $410 million over 20 years and the high cost for all
businesses combined to comply is projected at $6.9 billion over 20 years.

Energy and gasoline price impacts

We evaluated how the Clean Air Rule might affect the cost of electricity, natural gas, and gasoline. Businesses covered
by the rule are given several options to comply. Some compliance options will cost more money than others. We looked at the
least expensive way to comply and the most expensive way to comply and how that may affect costs to consumers. The charts
below show what we found.

Electricity cost projections

Natural gas cost projections

Gasoline cost projections

Employment impacts

Two scenarios were analyzed to project the effects on jobs in Washington. One scenario assumed energy and fuel companies would pass on 50% of costs to comply with the rule to consumers and the other scenario assumed they would pass on 100%.

Below are the ranges of projected impacts on jobs if the energy and fuel markets pass on 50% of costs to consumers: